Hill Watch: Update on Budgetary Issues on Capitol Hill

"Coalition Budget" is Budget Without a Coalition Plan
Would Harken Back to Days "Bracket Creep"

"Conservative" House members continue to push their "Coalition
Budget" (CB) as the starting point for budget negotiations with the White
House. Some Republican lawmakers are reportedly beginning to buy into this
idea. Touted as a "no tax cut plan," the CB actually calls for a tax
increase. It would do so by eliminating indexation of tax brackets, one of the
centerpieces of President Reagan's pro-growth tax reform plan approved in the
early 1980s that helped produce the nation's longest period of sustained
economic growth in American history. According to Ray Keating, Chief Economist
of the Small Business Survival Committee, such indexation stopped "bracket
creep" -- a process by which Americans lucky enough to receive raises to
keep pace with inflation were forced into higher and higher tax brackets even
though their real incomes remained the same or even declined. The elimination
of tax indexation isn't the only problem with the Coalition Budget: It would
cut discretionary spending by $86 billion less than the GOP plan, it contains no
tax relief or economic growth provisions, it would maintain the status quo on
welfare and would fail to ensure Medicare solvency. As the White House
contemplate which elements of the CB it will incorporate into its own seven-year
plan, it would be wise to remember this: The original CB received only 72 votes
in the House of Representatives. In other words, the Coalition Budget is a
budget without a coalition.

Where Are the GOP's Draconian Cuts?

The big government lobby continues to argue that the GOP's seven-year plan
calls for huge cuts in social welfare programs to fund tax cuts for the wealthy
and increases in defense spending. It does not: In fact, Defense programs are
among the few federal programs that would be cut. Over the next seven years,
Defense spending would total $1.8 trillion, down from $2.02 trillion the
previous seven years. Meanwhile, welfare programs would rise from $492 billion
over the past seven years to $878 billion over the next seven years; Medicare
Plus spending would rise from $926 billion to $1.65 trillion; and education, job
training and student loan spending would rise from $315.1 billion to $340.8
billion. Expenditures on natural resources and the environment would decline by
a mere two-tenths of one percent over the next seven years compared with the
previous seven. And how would the President restructure the GOP plan to make it
more to his liking? No one knows... He still hasn't released his plan to
balance the budget in seven years.

Government Spending Broken Down:

Defense: Spending Over Last 7 Years = $2.017 trillion GOP Spending
Over Next 7 Years = $1.87 trillion; that's a $146.8 billion decrease

Waste Watch: Where Government Can Slim Down

This past August, Transportation Secretary Federico Pena announced a
$600,000 education and prevention program to reduce the number of Americans who
run red lights. The Transportation Secretary said the program is needed because
motorists running red lights are to blame for $7 billion in damage, medical
bills and lost work time each year. Among the 32 communities that will receive
a share of $600,000 are such traffic-congested areas as Black Hawk County, Iowa.